Alicon Castalloy Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the Thirtieth Annual Report on business and operations of your Company along with the audited financial statements for the financial year ended March 31, 2020.

FINANCIAL HIGHLIGHTS:

(Rs in Lacs)
Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Revenue from operations (Net) 85,621 108,100 95,719 118,890
Other Income 251 252 279 316
Total Income 85,872 108,352 95,998 119,206
Earnings before interest, tax, depreciation and amortization (EBITDA) 10,431 14,188 10,869 14,962
Less: Depreciation and amortization expense 4,095 3,528 4,403 3,809
Earnings before interest and tax (EBIT) 6,336 10,659 6,466 11,153
Less: Finance costs 3,851 3,376 3,934 3,534
Profit/ (loss) before tax (PBT) 2,485 7,284 2,532 7,619
Less: Tax expense 801 2,265 828 2,324
Profit/ (loss) after tax (PAT) 1,684 5,019 1,704 5,295
Other comprehensive income/ (loss), Net of Tax (4) (60) (66) (10)
Total comprehensive income/(loss), Net of Tax 1,680 4,959 1,638 5,285
Earnings per share (In Rs)
Basic 12.27 37.26 12.41 39.31
Diluted 12.10 36.08 12.24 38.06

OPERATIONAL PERFORMANCE:

On standalone basis, the Company achieved a total income of Rs 85,872/- Lacs including other income of Rs 251/- Lacs for the financial year ended March 31, 2020 as against Rs 108,352/- Lacs in the previous year. In spite of several odds, the Company earned a profit before tax of Rs 2485/- Lacs as against Rs 7284/- Lacs for the earlier year. EBIDTA for the year under review was Rs 10,431/- Lacs.

On a consolidated basis, the total income for the year under review was Rs 95,998/- Lacs including other income of Rs 279/- Lacs as against Rs 119,206 Lacs in the last year. Profit before tax was Rs 2,532/- Lacs as against Rs 7,619/- Lacs a year ago. EBIDTA for the year under review was 10,869/- Lacs.

The Board of Directors has not proposed to transfer any amount to reserves.

A detailed analysis on the working of the Company and also various challenges faced by the Company during the year under review and current scenario is given separately under Management Discussion and Analysis, which forms parts of Annual Report.

DIVIDEND:

The Board of Directors in its meeting held on March 12, 2020 had declared an interim dividend of Rs 1.25/- per Equity Share of Rs 5/- each (25%). Considering the uncertain economic situation due to COVID-19 pandemic worldwide and consequent need to conserve the financial resources to meet exigencies of fund, your directors have not recommended any final dividend. Interim dividend, which was declared on March 12, 2020 be considered as final one.

SHARE CAPITAL:

On August 23, 2019, 135,000 equity shares of Rs 5/- each were allotted to the employees of the Company on their exercising Options granted to them under Employee Stock Options Scheme. Consequently, the issued and paid-up share capital of the Company as on March 31, 2020 stood at Rs 68,875,605/- divided into 13,775,121 equity shares of Rs 5/- each.

The Company has not issued any Equity Shares with differential voting rights. Hence, no information as required under Section 43(a) (ii) of the Companies Act, 2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014 is furnished. The Company has only one class of Equity Shares having face value of Rs 5/- each.

CONSOLIDATED FINANCIAL STATEMENTS AND SUBSIDIARIES:

Consolidated Financial Statements are prepared in accordance with the Indian Accountings Standard (IND AS) based on the financial statements of the subsidiary companies. The said consolidated accounts form part of this report and accounts.

SUBSIDIARY COMPANIES:

Your Company has three foreign subsidiaries viz. Alicon Holding GmbH, Illichmann Castalloy S.R.O. and Illichmann Castalloy GmbH. Alicon Holding GmbH is a 100% subsidiary of your Company, who in turn holds 100% capital of Illichmann Castalloy S.R.O. Illichmann Castalloy GmbH is a 100% subsidiary of Illichmann Castalloy S.R.O. Pursuant to the provisions of Section 136 of the Act, the Consolidated Financial Statements along with relevant documents and separate audited financial statements in respect of Subsidiaries are available on the website of the Company.

A statement containing the performance and financial position of each of the subsidiaries in Form AOC-1 is annexed as Annexure I and forms part of this report.

QUALITY INITIATIVES:

Your Company is committed to provide quality products and solutions. This commitment is secured by highly proficient workforce including a team of 200 engineers, who constantly wield their expertise to drive products of the highest quality. Based on the principles and benchmarks set by our Japanese collaborator, we continuously improve and streamline manufacturing process and systems year-on-year. Unbaiting desire to ensure component optimization and the lowest levels of product rejection, makes your Company the partner of choice for leading names worldwide.

FUTURE OUTLOOK:

During financial year 2019-20, your Company has received large prestigious orders with global OEMs like with leading Global OEMs and Tier 1 Suppliers such as Jaguar Land Rover, Daimler, Samsung SDI & MAHLE. The orders received are for supply of aluminium chassis, heavy truck engine parts, e-mobility parts and cooling modules of heavy engine trucks. These long duration contracts demonstrate Alicons readiness to adapt to emerging technologies and remain a preferred supplier to these major global OEMs and Tier 1 suppliers. This will result in steady and consistent volumes in the future. These new contracts exemplify Alicons technological excellence and innovation capabilities in the aluminium castings space. With a rich legacy of over 50 years, Alicon is a proven leader in the low-pressure die-casting and gravity die-casting technology in the domestic market and through its European Subsidiary, your Company is steadily enhancing its global presence with industry leading OEMs.

Though currently all manufacturing units are operating at lower capacity, the management of your Company will leave no stone unturned to achieve its long term strategy of multiplying current scale of operation once situation turns normal and economic activities are picked-up.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A detailed report on the Management Discussion & Analysis is presented separately in the Annual Report.

MATERIAL CHANGES AND COMMITMENT

No material change and commitment, which could affect your Companys financial position, has occurred between the end of the financial year 2019-20 and the date of this report.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of business of the Company during the financial year ended March 31, 2020.

INTERNAL FINANCIAL CONTROLS AND ADEQUACY

The Company has a comprehensive internal control system to provide reasonable assurance about the achievement of its objective, reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources. Appropriate review and control mechanisms are built in place to ensure that such control systems are adequate and are operating effectively. The monitoring and reporting of financial transactions is supported by a web-based system SAP, which helps in obtaining accurate and complete accounting records and timely preparation of reliable financial disclosures at all levels of the organization.

Risk Management Policy: The Company has adopted an Enterprise Risk Management policy and established a risk management framework with an objective of timely identification, mitigation and control of the risks, which may threaten the existence of the Company.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standard of Corporate Governance and adhere to Corporate Governance guidelines, as laid out in the SEBI Listing Regulations. All the Directors and the Senior Management personnel have affirmed in writing their compliance with and adherence to the Code of Conduct as adopted by the Company.

The annual report of the Company contains a certificate by the Managing Director in terms of SEBI Listing Regulations on the compliance declarations received from the Directors and the Senior Management personnel.

A separate report on Corporate Governance is annexed to this Report as Annexure II.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to SEBI Listing Regulations and have certified the compliance, as required under SEBI Listing Regulations. The Certificate in this regard is annexed to this Report.

The Chief Executive Officer and Chief Financial Officer certification as required under the SEBI Listing Regulations is annexed to this Report.

BUSINESS RESPONSIBILITY

Your Company has been conducting business from an Environment, Social and Governance perspective that not only delivers long term shareholder value but also benefits the society. The Business Responsibility Report as per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed as Annexure III and forms an integral part of this Annual Report.

RELATED PARTY TRANSACTION AND POLICY:

All contracts/arrangements/transactions entered into by the Company with Related Parties were in ordinary course of business and at arms length basis. All transactions with related parties were reviewed and approved by the Audit Committee and are in accordance with the Policy on Related Party Transactions formulated by the Company.

The details of the Related Party Transactions as per IND AS - 24 are set out in Notes to the Financial Statements of the Company. Since all the transactions with related parties entered into by the Company were in ordinary course of business and on arms-length basis, Form AOC-2 is not applicable to the Company.

The Company has formulated a policy on Related Party Transactions, which is available on the Companys website at https://www.alicongroup.co.in/wpontent/ uploads/2018/10/Related_Party_Transactions_Policy.pdf.

There was no materially significant related party transaction entered into by the Company with Promoters, Directors or Key Managerial Personnel or their relatives, which may have a potential conflict in the interest of the Company at large.

WHISTLE BLOWER POLICY AND VIGIL MECHANISM

The management of your Company is committed to conduct its business in accordance with the highest standard of business ethics, openness, probity and accountability and oppose and seriously takes any unethical or unlawful conduct by any of its stakeholders. To that end, any concern related to malpractice or impropriety is treated with utmost seriousness. The Whistle-blower Policy ("Policy") enables Stakeholders associated with your Company to voice their genuine concerns in a responsible and effective manner. It is a fundamental aspect of every contract of employment that an employee shall faithfully serve the employer, shall not misuse his/her position in the Company and shall not disclose confidential information about the employers affairs for personal gain.

The Company has adopted a Whistle Blower Policy and has established the necessary vigil mechanism for Directors and employees to report concerns about unethical behavior. No person has been denied access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company at https:// www.alicongroup.co.in/wp-content/uploads/2018/10/ Whistle_Blower_Policy.pdf .

SECRETARIAL STANDARDS

The Board of Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively, have been duly followed by the Company.

DIRECTORS & KEY MANAGERIAL PERSONNEL

The Board in its meeting held on October 15, 2019, had appointed Mrs. Veena Mankar (DIN: 00004168) as an Additional Non-Executive Independent Director of the Company. Mrs. Veena Mankar has over four decades of experience in financial services, with banks, non-banking financial institutions and as a strategy consultant. Her expertise is in trade and structured finance, including factoring and forfaiting, finance for SMEs and financial inclusion. Mrs. Mankar is B.A. in Economics from Lady Shree Ram College, Delhi University and post-graduate in Business Administration from the Indian Institute of Management, Ahmedabad. Mrs. Veena Mankar would be vacating the office of Director in the forthcoming Annual General Meeting (AGM) pursuant to the provisions of Section 161 of the Companies Act, 2013. The Company has received an intimation from a shareholder conveying his intention of proposing her appointment as an Independent Director in the ensuing AGM.

The Board in its meeting held on March 12, 2020 had decided to seek members consent to the re-appoint Mr. Ajay Nanavati (DIN: 02370729) as an Independent Director of the Company for a further period of five (5) years w.e.f. April 30, 2020. Necessary special resolution is included in the notice convening the AGM.

To comply with the requirement of the Companies Act,2013 and Articles of Association of the Company, Mrs. P. Rai, Director (DIN: 00050999) shall retire by rotation at the forthcoming AGM and being eligible has offered herself for re-appointment.

Information and brief profile of Directors seeking appointment/re-appointment are provided in the separate annexure to the Notice, convening 30th AGM. This annexure forms part of this Annual Report.

During the year under review, none of the non-executive directors had any pecuniary relationship or transactions with the Company.

Mr. S. Rai is the Managing Director, Mr. Rajeev Sikand is Chief Executive Officer, Mr. Vimal Gupta is the Chief Finance Officer and Mrs. Swapnal Patane is the Company Secretary of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

In compliance with the provisions of Section 149 (6) of The Companies Act, 2013 requisite declarations have been received from the Independent Directors regarding meeting the criteria of Independence.

NUMBER OF BOARD MEETINGS AND COMMITTEES OF BOARD

The Board of Directors met six (6) times during the Financial Year under review viz. April 19, 2019, July 26, 2019, October 15, 2019, November 28, 2019, January 28, 2020 and March 12, 2020. A separate meeting of Independent Directors was also held on March 12, 2020. The details on attendance of Directors in each Board Meetings and other Committee Meetings of Board of Directors are provided in Corporate Governance Report, which forms part of the this Report.

AUDIT COMMITTEE & COMPOSITION

The composition of the Audit Committee is in terms of requirements of the Companies Act, 2013 read with the rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The details pertaining to the audit committee are included in the Corporate Governance Report, which forms part of this report.

THE NOMINATION AND REMUNERATION POLICY

The Board has adopted a policy on Nomination, Remuneration and Board Diversity which sets out the criteria for determining qualifications, positive attributes and independence of a Director.

The Companys Policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters is annexed to this Report as an Annexure IV.

PERFORMANCE EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

In accordance with applicable provisions of the Companies Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the evaluation of the Board as a whole, Committees and all the Directors was conducted, as per the internally designed evaluation process approved by the Board.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to be best of their knowledge, confirm that –

a) in the preparation of the accounts the applicable accounting standards have been followed along with proper explanations relating to material departure;

b) appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

PARTICULARS OF EMPLOYEES

Information on Particulars of Employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms an integral part of this Report as an Annexure V.

The information required pursuant to section 197 of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of your Company is available for inspection by the Members at the registered Office of the Company during the business hours on working days up to the date of ensuing AGM. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary, whereupon a copy would be sent.

EMPLOYEES STOCK OPTION SCHEME (ESOS)

Disclosure as required under Section 62(1)(b) of the Companies Act,2013 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules and Regulations 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 is given in Annexure VI to this report. The Company has received a certificate from the statutory auditors of the Company, stating that Alicon Castalloy Ltd. - Employees Stock Option Scheme, 2015 and Alicon Castalloy Ltd. – Employees Stock Option Scheme, 2017 have been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014.

RECEIPT OF REMUNERATION BY MANAGING DIRECTOR FROM SUBSIDIARY COMPANIES

Mr. S. Rai, Managing Director of the Company, has not received any remuneration from any of its subsidiary companies.

AUDITORS

STATUTORY AUDITOR

M/s. Kirtane & Pandit LLP, Chartered Accountants (ICAI Registration No. 105215W/W100057), were appointed as the Statutory Auditors of the company to hold the office for a term of five (5) years from the conclusion of the 27th AGM until the conclusion of the 32nd AGM of the Company to be held in the year 2022.

Pursuant to notification issued by the Ministry of Corporate Affairs on May 7, 2018, the mandatory requirement of ratifying the appointment of the Statutory Auditors in every Annual General Meeting has been repealed.

According to Board of Directors, there is no adverse remark made by Statutory Auditors in their report. Notes to the accounts are self-explanatory to comments/observation made by the auditors in their report. Hence, no separate explanation is given.

Further, no fraud was reported by the auditors of the Company under Section 143(12) of the Companies Act,2013.

SECRETARIAL AUDIT REPORT

Secretarial Audit was carried out by Mr. Upendra C. Shukla, Practicing Company Secretary, Mumbai, for the financial year 2019-20. The report on the Secretarial Audit is appended as an Annexure VII to this report. According to the Board of Directors the report does not have any adverse remark.

COST RECORDS

As per the Board of Directors of the Company, maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is not required by the Company and accordingly such accounts and records are not made and maintained.

EXTRACT OF ANNUAL RETURN

An extract of Annual Return in Form MGT-9 in pursuance to the provisions of Section 92(3) of the Companies Act, 2013 is placed in the Website of the Company www.alicongroup.co.in.

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND INITIATIVES

The management of your Company do believes that sustainability is its collective responsibility. This is why, your Company is closely engaged in various endeavors to serve the communities. The main focus remains on rural development, education and health including sanitation.

Your Company undertakes majority of its activities relating to corporate social responsibilities through Bansuri Foundation. It also works closely with other trusts and NGOs.

Brief outline on the Corporate Social Responsibility (CSR) Policy of the Company and the initiative undertaken by the Company on CSR activities during the year are set out in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and is annexed as an Annexure VIII to this report. The CSR Policy is hosted on the Companys website www.alicongroup.co.in.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any Deposit under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments covered under the provisions of section 186 of Companies Act, 2013 are given in the Notes to financial statements.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Disclosure of information regarding Conservation of Energy, Research & Development, Technology Absorption and Foreign Exchange Earning and Outgo etc. under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed separately as an Annexure – IX.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There was no significant and material orders passed by the Regulators / Courts / Tribunals, which would impact the going concern status of the Company and its future operations.

SEXUAL HARASSMENT OFWOMENATWORKPLACE

In compliance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has duly constituted an internal complaint committee. The Committee has formulated policy to ensure protection to its female employees.

INDUSTRIAL RELATIONS

Industrial relations across all the manufacturing locations of your Company were cordial and very positive through the year under review.

In order to develop skills and foster togetherness at the work place, your Company rolled out multiple training and engagement programs covering a wide range of topics such as stress managements, attitude, creativity, team spirit, quality, skill building, safety and environment, customer focus, etc.

ACKNOWLEDGEMENT

Your Directors wish to thank Enkei Corporation, Japan, our technical collaborator, for their valued support and guidance for development of new parts. Your Directors also take this opportunity to thank all the customers, vendors, bankers and other business associates for their continued support. Your Directors also thank all the employees for their commitment, hard work and contribution to the Companys excellent performance. Your Directors are thankful to all the Shareholders of the Company for their unstinted support and confidence reposed in the Management of the Company.

On behalf of the Board of Directors,
S. Rai A.D. Harolikar
Managing Director Director
Place: Pune
Date: June 26, 2020